Price Theory [Paperback]

Milton Friedman (Author), Steven G. Medema (Introduction)

Book Description

Publication Date: March 31, 2007

Economics is sometimes divided into two parts: positive economics and normative economics. The former deals with how the economic problem is solved, while the latter deals with how the economic problem should be solved. The effects of price or rent control on the distribution of income are problems of positive economics. The desirability of these effects on income distribution is a problem of normative economics.

Within economics, the major division is between monetary theory and price theory. Monetary theory deals with the level of prices in general, with cyclical and other fluctuations in total output, total employment, and the like. Price theory deals with the allocation of resources among different uses, the price of one item relative to another.

Prices do three kinds of things. They transmit information, they provide an incentive to users of resources to be guided by this information, and they provide an incentive to owners of resources to follow this information. Milton Friedman's classic book provides the theoretical underpinning for and understanding of prices.

Economics is not concerned solely with economic problems. It is a social science, and is therefore concerned primarily with those economic problems whose solutions involve the cooperation and interaction of different individuals. It is concerned with problems involving a single individual only insofar as the individual's behavior has implications for or effects upon other individuals. Price Theory is concerned not with economic problems in the abstract, but with how a particular society solves its economic problems.

Editorial Reviews

About the Author

Steven Medema is professor of economics and director of the Honors and Leadership Program at the University of Colorado–Denver. His research focuses on the history of twentieth-century economics, and his latest book, The Hesitant Hand: Taming Self-Interest in the History of Economic Ideas, was awarded the 2010 Book Prie by the European Society for the History of Economic Thought.

Milton Friedman is a senior research fellow at the Hoover Institution of Stanford University. Before that, he was Paul Snowden Russell Distinguished Service Professor of Economics at the University of Chicago. He has also taught at Columbia University, the University of Wisconsin, the University of Minnesota, and Cambridge University. Among his many books are Essays in Positive Economics, A Program for Monetary Stability, Capitalism and Freedom, A Monetary History of the United States, and The Optimum Quantity of Money.

Product Details

• Paperback: 357 pages
• Publisher: Aldine Transaction (March 31, 2007)
• Language: English
• ISBN-10: 020230969X
• ISBN-13: 978-0202309699
• Product Dimensions: 8.9 x 6 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (8 customer reviews)
• Amazon Best Sellers Rank: #251,850 in Books (See Top 100 in Books)

More About the Author

Milton Friedman is a senior research fellow at the Hoover Institution, Stanford University, and the Paul Snowden Distinguished Service Professor Emeritus of Economics at the University of Chicago. In 1976 he was awarded the Nobel Prize in economics. He has written a number of books, including two with his wife, Rose D. Friedman---the bestselling Free to Choose and Two Lucky People: Memoirs, the latter published by the University of Chicago Press.

Customer Reviews

Most Helpful Customer Reviews

51 of 57 people found the following review helpful:

5.0 out of 5 stars One of the Best Economics Books Ever Written, July 17, 2002

By 

David DeRosa (New Canaan, Connecticut USA) - See all my reviews
(REAL NAME)   

This review is from: Price Theory (Hardcover)

I was lucky enough to take Dr. Friedman's two-quarter graduate sequence in price theory (called "microeconomics" elsewhere) in the early 70s at the University of Chicago. This book was the textbook. I have never revised my original opinion that Friedman's 301 and 302 were simply outstanding, maybe the best courses I ever had in economics.

You can put that in perspective when I tell you I spent ten years at Chicago, earning both my bachelor's and PhD -- by this I mean I took a lot of economics courses. If you know anything about the Chicago School of Economics you are aware that price theory occupies a special place in their scheme of things.

The good Doctor retired from Chicago around 1973 or 1974, if I am not mistaken (he moved to the Hoover Institution. You can't take "Milton" on price theory today -- but you can read his book. And it what a fine book it is. I recommend reading George Stigler's "The Theory of Price" before attemption this book. Master them both and you will have a very solid foothold on price theory.

26 of 27 people found the following review helpful:

5.0 out of 5 stars This is the BEST book on price theory ever written., November 5, 2000

By 

Gary Parikh "garyparikh" - See all my reviews

This review is from: Price Theory (Hardcover)

A serious book for serious students - no glossy pages, no color, and not a single wasted word. Friedman's book is the most authoritative and definitive textbook on Price Theory around. The material may be more difficult than some textbooks but this is, after all, economics Chicago style. Price Theory offers a rigorous and demanding treatment of the subject, exactly what a serious student should want.

17 of 17 people found the following review helpful:

5.0 out of 5 stars A great intuitive approach, September 3, 2006

By 

emanriqu "emanriqu" (AREQUIPA, AREQUIPA Peru) - See all my reviews

This review is from: Price Theory (Hardcover)

When i studied microeconomics i paid too much attention on the "inner" sense of models (perfect and unperfect markets). But this way of studying keeps a student a little bit far from what really matters in any of them: its power to explain, its power to catch up essential features from social reality (in this case, essential features from flesh-and-bone markets). Well, this book helped me a lot to restore my sense of reality when i think of basic microeconomic concepts (demand and supply curves, marginal cost / productivity, etc.). Friedman has an intuitive approach to microeconomics. He shows that models are engines to think of economic reality, they are not by themselves the ultimate goals of economic science. Study models. Do it properly. If in the road you feel your mind lost, take back to this classic and make a review of your usual assumptions. Economics is mathematics, yes, but with economic sense what stands for good understanding of what it is being modelled.

I strongly recommend to read this textbook in microeconomics before starting others, with a more mathematical approach.